IMF Warns of Dangers of Fed’s Rate Rise, Brazil Says Inflation ‘Won’t Be Temporary in West’

cryptonews.com:

Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), has warned that the Federal Reserve (Fed)'s next interest rate hike could “throw cold water on nations with high levels of dollar debt” – and their recovery from the COVID-19 pandemic’s economic fallout.

Georgieva was speaking at an event named “Global Economic Outlook” at the World Economic Forum in Davos, where she stated that the Fed was “acting responsibly” in its response to fast-growing inflation. 

She said that inflation was “turning into a social and economic concern” in the United States, but expressed concerns about countries with dollar debt and “low-income nations” – claiming that “such nations must act now” if they wanted to avoid the repercussions of a US rate hike.

Many forecasters have predicted the Fed will announce its decision to raise rates sometime next week, with the rate rise itself expected to take place in March.

The IMF chief praised central banks, claiming that they had “prevented a great depression” in their response last year, but stated:

“We need policy flexibility this year; 2022 will be like an obstacle course.”

She predicted that the global recovery would continue in 2022, although she said that “it is losing some momentum.”

But Georgieva conceded that “much more persistent than expected inflation” was now a problem, with “supply falling behind rising demand” and “supply delays caused by COVID-19,” as well as rising food prices caused by fuel price increases among other factors.

However, the picture was different in Brazil, where Paulo Guedes, the Minister of Economy warned that “the beast of inflation is out of the bottle” in the West, adding that inflation in North America and Western Europe “won’t be